Federal reserve regulation k
Fed functions: supervising and regulating financial
The Federal Reserve Board released a final rule today amending Regulation K (International Banking Operations) to resolve the management of offshore offices by foreign bank U.S. branches and agencies.
The law applies a provision of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, which amended the International Banking Act of 1978 by introducing a new provision about the management of foreign banks’ shell branches by their U.S. offices.
The provision forbids foreign banks from using their U.S. branches or agencies to manage operations that could not be handled by a U.S. bank through its foreign branches or subsidiaries through offshore offices. This restriction extends to offshore offices that are “owned or operated” by a foreign bank’s United States subsidiaries or agencies.
Daniel k. tarullo, “regulatory czar” of the federal reserve
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The Federal Reserve Board (FRB) and the Federal Deposit Insurance Corporation (FDIC) have developed Regulation K as one of their regulations (FDIC). This regulation governs a variety of international banking issues, including the international banking front in the United States, by providing guidance for bank holding companies that participate in international trade as well as foreign banks based in the United States. It restricts the types of activity, financial activities, and transactions that domestic banks, holding companies, and foreign banks may engage in.
Federal reserve financial stability report
We assume that an international bank should be able to satisfy the “comprehensive consolidated supervision” (“CCS”) requirement of the exemption if it is from a jurisdiction where at least one other international bank has been determined by the Federal Reserve Board to be subject to CCS and the international bank is supervised on substantially the same terms and conditions. Given the existence of the bank regulatory procedure needed to obtain a CCS decision, requiring an issuer to have obtained a CCS determination would result in arbitrary outcomes, and would arbitrarily deny the benefits of the exemption to those issuers that are subject to the same home country regulation as other issuers who qualify for the exemption.
The Institute continues to believe that particular insider lending limitations imposed in the United States should not be extended to foreign banks that meet the proposed exemption’s CCS/deposit insurance requirement. However, if an insider lending restrictions condition is maintained in the final Rule 13k-1, we will ask the Commission to make it clear that insider loans will fulfill the condition if they meet the insider lending conditions stated in the Proposed Rule (i.e., if they are made on arm’s length terms, made pursuant to employee benefit plans that do not discriminate in favor of insiders, etc.). Any requirement that an international bank’s particular insider lending requirement be reflected in its home country laws or regulations, in the Institute’s opinion, would unfairly discriminate against international banks from jurisdictions that have opted not to follow insider lending requirements in the form of laws or regulations.
Federal reserve vice chairman quarles testifies
The Federal Reserve Act of 1913 established the Federal Reserve System as the nation’s central bank, with the goal of making the country’s monetary and financial system safer, more flexible, and secure. The legislation defines the System’s aims, structure, and functions, as well as aspects of its operations and accountability. The Federal Reserve Act may be amended by Congress, as it has done many times in the past. The entire act, as amended, is available here, section by section.